tv On the Move Bloomberg August 6, 2015 3:00am-4:01am EDT
reek futures. it is called super thursday in london. it is not so super for the commuters. let's go to caroline hyde. caroline: we are expecting equity markets to go trade lower today, not much enthusiasm ahead of what is super, mega, whatever you want to call it. you will get a flurry of data. whether it is the economic forecast. the u.s. has been central bank focused. the united states trying to read the data. it is the strongest in a decade
the iso. france is up by 3/10 of a percent this morning. let's have a look at a fax -- fx the pound is trading higher. clearly some anticipation we will see tones of potential rate rises. the euro is spikes higher on the back of data. german orders are better than anticipated, up 2%. we saw the euro come off lower. employment surprised me the aussie dollar came back down. we are seeing unexpected jumps in unemployment.
we are not sure if there will be cuts in the interest rate and the australian central bank. yield spiking higher in britain, ahead of the super thursday. will we see a split? spain and france go to the debt market, selling bonds, deals coming lower on both. let's have a look at some of the equities. still coming thick and fast. could we see a merger in a u.s. company, looking at merging with oci. rio tinto is up 1.21%. profit down 43%, but it was a beat. munich re is raising the profit
with a net income over one billion euros. jonathan: let's head out to hong kong to get the asian market wrap. david: it is not a super day, it is more like super bring back monday please. the second day of declines. we are seeing a lot of red. the play of the day was pulling back out of the equity markets. yields are on the way up equities down. the only bright spot, japan close about an hour ago, close at its highest level -- closed
at its highest level since 2007. we are inching our way closer to the peak right before the financial crisis. that is the story across equity markets. let me show you fixed incomes. well grounded expectations i think is the proper way to describe it. this has played into the session take a look at what is happening across the 10 years, up three basis points same story with south korea and australia. let's in the shanghai composite fresh take, goldman sachs coming up with an estimate of just how much the state backed funds have
helped as far as intervention, a hundred 45 billion -- $145 billion has been injected into the market in terms of intervention to property market up -- to get the market up. i will leave it there. jonathan: thank you very much. they call it super thursday in london. at noon, governor mark carney will swarm the market with a torrent of data. the forecast will be released for the first time. the change in the medication strategy comes amid a change of policy 10 -- policy and strategy
changes come. >> what a big day today. unprecedented. we will get the interest rates decision from a bank of england. we will also get the economic forecast, all of that data will come out at 12:00 noon london time. governor mark carney will give a news conference with more details. key things, will bilby defenses in the monetary policy committee -- will there be defenses in the monetary policy committee. forecasters do expect some to vote for a rate rise. we will look at the inflation forecasts, and what the bank of
england says about wage growth. investors will be listening very closely to mark carney to the -- see exactly what he says. particularly what he might say about external effects, for example for greece on the u.k. economy. jonathan: thank you. stay with bloomberg tv throughout the day for super thursday. for the investors take some other are three people i called to talk next income, -- fixed income, two of them are with me. super thursday. >> may i say -- >> let me finish, it was my idea to with them on at the aim time -- same time.
>> i think it has been hyped. it is a great way to sell interest in what the bank of england is doing in a quiet summer. today will be a fairly standard analysis of what the bank is saying. >> i think we know who the people who may shift their both are -- votes are. expectations have been going down, but growth could go upwards, but net, nothing has happened. >> growth was downgraded by nis but why should we expect a rate hike? jonathan: when i look at the banks forecast for 2016, pitted against the federal reserve
forecast, they are pretty much in line. there is not much giving. why are we talking about the hike for the fed? >> you can add to that with the front end yields are. in the u.s., the difference is wide. the market is twitchy. in the u.k. that is not in the price, it is later. it is true that the guidance from the bank and the fed is quite a line. the exit challenges the same. -- challenge is the same. they both have the same problem. the stuff i want to know is how do you lift rates when you have access reserves that say that you cannot.
they are not talking about that. >> a couple of points. the most important thing is not you guys trying to height super -- jonathan: the bank of england decided to change their strategy. one week you get the decision then you get minutes the idea was to have it at once. does that not work? >> not really. quite used to looking at data and deciding what it means. it is not distant -- it does not need to come in a flurry of packaging. when mark started, someone told me he is the guy you want to go to the public, that is not true -- pub with, that is not true.
jonathan: when you talk about hike the only person talking about a rate hike is the governor. >> the important thing is in the u.s., what will we say with tomorrow's nonfarm payrolls number. if that number is strong, we will see the early u.s. hike. i see danger tilt into that -- built into that. i look at the u.s. stock market one of the biggest indicators of confidence one stock stands out , my canary in a coal mine apple. a 15% decline in 10 days after decent results that beat expectations tells me that that is a signal of a u.s. stock
market that is unconvinced and is vulnerable to the prospect of a rate hike if we get one for a rate hike's fake -- sake. maybe a rate hike is the right thing to do. jonathan: hsbc is pushing back the call for a rate hike from the fed, and thinking differently. >> our call is that yields will be lower, not higher. we imagine there will not be one in september. it claims to be data dependent. they should have hiked already if they are data dependent. the fed's own growth forecast is
likely to be less. meanwhile, inflation has gone down. how do they explain a rate hike in september given the data dependency. if there is another reason i would like to know what it is. >> i have been calling the beginning of the bear market since february i have ranted about it. i am getting to the point where i am not convinced it is happening. you look at the global economy and say, where is the growth? i think we will get a rate hike because there are political, economical reasons where it would be a good signal. i am almost to the view that a u.s. rate hike could be aimed by a moment -- could be a buy a
moment for the u.s.. you might see bonds start to recover. jonathan: if anyone has an incentive to keep it gradual some people talked about it being the u.k. saying this country we should focus on going early, why are we not doing that? >> it is a good point. in the u.s. it is all about the long and. here, no one cares. the real rape are -- real rates are not impacted by the long and -- end. they tried to tighten financial conditions through lending but mark carney seems to want
everyone to know the bank wants to increase rates. i have charts that can show you there have been five or six times in the last six years where markets are excited about a rate hike, and it never happened. jonathan: what does that mean for the fx market? the euro sterling is at a seven-year low is there a case for a dovish surprise? >> i do not think we are expecting one at all. we are expecting a three against six votes and reports, and inflationary expectations are low. if we see the chance for the u.k. interest rate delayed, that has to be good for a lower
sterling. then you enter the game of competitive devaluation that is one of the reasons the global economy is in a mess. jonathan: mark carney endorsed market pricing months ago, did he do that again? is that ok for the bank? >> may next year is a long way away. there is a risk it could be earlier. i think it is dangerous to actually pin down the exact eight -- date. it is best to avoid that. jonathan: bill, stephen,, three -- 6, 3?
thank you very much for joining us. stay with bloomberg for full coverage of super thursday. we will bring you the market reaction analysis, and the news conference in full. coming up, we break down the big earnings out of germany. rio tinto reports a drop in profits and iron ore profits collapse. gearing up for a busy day super thursday for the bank, not so super for the commuters. back in two. ♪
19% of saudi arabia's revenue comes from crude. rio tinto reported a drop in profit after iron ore prices collapsed we speak to the ceo for more on those earnings in just under 30 minutes. wrangled reported earnings trading higher. anna, brutally honest wasn't he? anna: the stocks are up, cost out -- cost per ounce is going down. the gold price is at a five-year low. back in july, the ceo of rangold said if we saw $50 come off the price that would mean the industry was toast. since then we have seen six the
five dollars coming off the price. is the industry toast? >> i believe so. i believe it is toast. anna: technical definition? >> if you look at the data, it is unsustainable. the industry has continued to live and hope for a higher price to bail it out. rangold has set its long-term price at $1000, it is tough for us. those that have designed their business at the longer-term require some sort of real reengineering of our business. we have this debt, the demand to service the debt so this continued requirement to produce to service the debt, hoping that one day the price will go up. anna: what breaks?
gold is feeling the pressure, what breaks that? >> the banks are so pregnant with debt, it is a difficult decision. the mining industry has to be more disciplined and cut out unprofitable reduction -- production. we are over supplying the market with unprofitable products like gold and iron ore businesses are similar. many other of the metal industries. anna: who is to blame? is it the businesses that started during higher prices? is it sort of a game of chicken. mark: there has been the game of chicken played. right now and up until recently
all of the analysts have said he will get through it -- we will get through it. now people are looking for who will survive. anna: the ceo of rangold who says they need to find the discipline to cut back reduction -- production. jonathan: let's talk about the gold miners doing the cutting back. where did a cd price going -- where does he see the price going? anna: i tried, who knows? it is the same answer you get from any of these energy bosses. he says he cannot say. he says that his is a company that is positioned for a long-term price around $1000. he says you can imagine the pain
that the businesses are suffering who have factored in more money. they are managing to squeeze costs out as suppliers have come into line. jonathan: can watch the full interview on bloomberg.com. anna edwards, thank you very much. let's talk german earnings. the sportswear company says they missed estimates. they are pushing products intended close the sales gap with nike. the bar was set high, then there was this red color all over again. hans: there is light at the end of the tunnel with gulf. adidas has hired a bank to look at tailor-made.
yes there was a miss on the income, but sales was at 3.9 one billion. they do have a challenge in terms of their golf unit. you see adidas up 8%. reebok is up 6%. the tailor-made golf unit is down 26%. last year they had sales of 931 euros. -- 931 million euros. the question is what is the fourth -- worth? those are things we will be watching, and what their plans are. there are a lot of things going on with deutsche earnings. deutsche telekom had a clear beat helped by the weaker euro and the u.s. sales. jonathan: on the move for the
1%. the target -- gold is south of $1100. brent crude is below $50 a barrel. decent stock stories, let's get to them with caroline. caroline: this move is the biggest on record with this particular company. the world's largest ins i maker -- ins i maker -- numbers are not good. second-quarter earnings missed analysts estimates. sales growth goals brought down a bit. they could still grow anywhere up to 16%.
novozymes worst performer on its record. dutch post also following -- falling. earnings were 12% below estimates. they are saying the strike affects are what hurt, 100 million euros in the second order -- second quarter from a postal strike in germany. both of these thinking -- thinking. column -- cobham is up 8.5%. it is merrily up due to an acquisition. this is a company that is changing itself around by
investing in certain businesses. the interim dividend is up 5%. jonathan: thank you very much. let's get to the top stories. the bank of england will announce it interest rate decision at noon today. this is the first time the central bank has scheduled a simultaneous publication. london city airport is to be a -- put up for sale. they have decided to sail -- sell the airport. it could fetch as much as 2 billion pounds. egypt opens its new suez canal today. it has completed -- been completed two years ahead of schedule. big day here in london and across london for the miners rio tinto profits beat estimates.
bloomberg news reporter jesse joins us now. jesse, i look at it and i think plunging oil prices. jesse: iron oil prices have been extremely volatile. rio tinto prices are up. underlying earnings are down. fairly positive they will beat consensus. the market initially traded flat. jonathan: when i go forward into next year, is this the base to make comparisons to see how they deal with $60 iron ore in years to come?
jesse: yes. rio tinto spoke to that theme for themselves today. high-cost producers will be exposed, lower cost producers will maintain a competitive advantage. they are continuing to pump out more from australia. that would make them the world against exporter. that is the theme for rio tinto low-cost, long lives assets. jonathan: when i look at miners it is like herding cats you see copper coal, will these guys streamline business? jesse: bhp focused on that. so far, rio tinto has maintained their exposure to key
commodities like iron ore. there are rumors they may be looking to sell coal assets. it would not be surprising to see a lot of these mining companies streamline. jonathan: a year ago we set here --sat here talking about another company buying rio. what a change. what happened? jesse: it is remarkable. that story has gone from realistic to dead in the water. consolidation -- industry experts assumed it would kickoff by now. in hindsight you could say wise move, prices are trending lower, why buy into it?
it will be a strong signal for the sector. we have seen it pick up and gold. -- in gold. jonathan: to talk about another company glencore though stocks are trading at a record low. we have a trading arm when commodities fall, this will offset us. kind of like the energy business. has that happened? jesse: it is hard to say. we will know into weeks. you can get a bit of a read through from the share price. perhaps the market expects they will not outperform. it has been a tough market for all commodities. we have seen some commodity trading companies share prices be hammered -- get hammered.
jonathan: if we have the opportunity to talk to them in last number -- glastonbury i'm sure we would know. how long can sam walsh do that? jesse: as he talks about the new normal for commodities, the higher cost producers will exit the market. jonathan: when you see the market share, what are we pushing, 70%? jesse: yes. we will see higher prices in china, australia, perhaps with america -- north america. rio tinto said they had 110
of england decision. gold trading -- treading water. crude is below $50 a barrel. let's get up to speed with some of the top stories. snack maker, mondelez has to grow revenues faster and cut costs or sale -- sell to a rival. saudi arabia is planning bond issues by the end of the year. a debt sell would be the strongest sign of the pressure low oil prices are putting on the country. about 95% of the revenue for the -- revenue for saudi arabia comes from oil.
we are minutes away from the forecast the first time the central bank has scheduled a simultaneous application -- publication. one market pro has broken down the order of play for super thursday. >> get that initial reaction. then people will come over and they it's more dovish you will get a secondary reaction. that is why it is volatile. >> are we going to get the raw data, we could get big moves. we will see in the future how important the data is. prices are seen as an expensive day, this is an expensive day that moves markets. the u.s. has payrolls.
the main thing we are looking for is the vote. what is the number? what was the discussion. what has happened with the forecast? have a raised inflation? what is going on? you dig down. if it is three you go in and say how close are they? you say what they are focusing -- forecasting. we start drilling down into the details. this is a people driven day. there is so much information. the question is what is that we
should look for? the algorithm has to learn something. at the beginning humans will beat the algorithms. jonathan: that was david bloom. we will bring you super thursday live on bloomberg tv at noon. rio tinto out with numbers. first-half profit beat estimates , it has dropped 43% from one year ago. sam walsh, the ceo of rio tinto joins us now for his first interview of the day. sam, great to have you with us. sam: good morning. i am pleased to be with you. jonathan: we talk about profit dropping, would it be unfair to the manager of the company? when i look at your numbers, how do i read them? how do you read them?
what does this say about your business? sam: it is a critical result in what is a challenging market. in terms of improving our cost base, and working capital, all of these come together to deliver a critical result which has enabled us to continue to get a 12% increase in dividend in u.s. dollars and we will continue with that $2 billion buyback. this is good news for shareholders, which is an important focus for me. jonathan: when you look at the market, you describe it as the normal -- new normal. what is that? sam: the industry has traditionally been cyclical. people expect that one day the market will return to where was a couple of years ago.
we are expecting me new normal will probably be somewhere in the middle between where we are now and where we have been. that implies -- applies not just to commodities, it applies to oil, gas, whole range of things. as the world looks for efficiency and more efficient investment, that is why we reshaped the business 2.5 years ago so we could meet expectations of customers. jonathan: when you look at the shape of the business and how you streamline, is it fair to a the coal business could be sold off? can you can term -- can you confirm or deny? sam: i have made the comment if anyone wants to make me an offer that values are assets more than we do, of course we will look. investment bankers constantly come up with ideas.
if one of those actually does turn out to value something more than with us, of course we will look at it. it is the range of commodities, my focus is on the business. we have a great business. jonathan: sam wash, joining us -- sam walsh joining us, i am sad to say the line has gone down. it is super thursday for the bank of england, not so super for london city commuters. ♪
the underground will remain closed until early tomorrow. then cap joins us now -- then --. i don't think people will care too much about the argument they just want the tubes to reopen, and is not to happen again. what do they have to do? >> go back to the table. they said both the unions as well as the underground are both open to resuming talks. the suites -- it is a sweet deal , it is one the union has rejected. they want a deal that really allows them the same balanced life type of thing that the london of an -- underground thinks they are giving them. jonathan: there is a host of commuters walking across the millennium bridge. let's let the viewers decide. what do they currently get in
terms of holiday and hours? >> the existing offer would go no increase to an existing work week. it is 36 hours. no increase. 43 vacation days a year that is combined with an above inflation rate hike. they will also get a 2000 pound want some -- lump sum. they currently get under 50,000 pounds a year. that is 2000 and above the national average for tram and real drivers -- real drivers. jonathan: we will look forward to our walk home later this evening. when you look at the situation, more serious, is this an
argument over unions is is conservative, or is it over technology? will it become more automated? >> it might be. initially the discussion is about automated sheens -- automated machines. the unions are asking for the ticket offices -- officers tuesday. -- two stay. jonathan: a not so super thursday for london commuters. then cap -- thank you. i am looking for to my walk home. stay tuned to bloomberg tv throughout the morning. we will be covering the bank of england conference at noon. we will get the decision and the
minutes. we will get those fresh forecast for the inflation report. governor mark mark -- mark carney speaking later. we get u.k. industrial manufacturing production and then it 10:00 we get the unemployment rate. later we get initial jobless claims out of the u.s.. payrolls friday is tomorrow. we will be on that throughout the day. the dax is treading water, dead flat. a click check on fx, the euro is -- has dropped. that is it for me. i am on twitter. best of luck for the rest of your day. good luck to the city of london getting home. ♪